GATE-SHARING PLAN ON RADAR AT O'HARE

Aiming to make greater use of scarce aircraft gates at O'Hare International Airport, the Chicago Department of Aviation is pushing for airlines to share their domestic arrival and departure facilities with competitors.

Such a change would be a fundamental shift in the incumbent airlines' financing, use and control of most of the airport's domestic gate space under long-term, exclusive leases.

Gates already are shared at O'Hare's International Terminal, which is operated by an independent contractor that's approved by the city and paid by the airlines to allocate gates.

While landing and takeoff rights are still O'Hare's tightest resource, new entrants also face the hurdle of subleasing gate space from existing airlines on affordable terms.

"The devil's in the details, but in general, it's a big step forward," says Jay Franke, Chicago's commissioner of aviation from 1989 to 1992 and now assistant director at Northwestern University's Transportation Center.

The move -- which follows a capital improvement plan unveiled by the city earlier this year -- comes as the nation's largest airport and other aviation hubs are facing increased pressure to enhance competition. In May, the federal Department of Transportation (DOT) announced a study of airport practices and their impact on competition, especially the use of passenger facility charges (PFCs), a local airport tax on departing passengers that's been allowed by federal law since 1993.

Clearly, the political momentum is in DOT's favor. Late last month, the House Transportation and Infrastructure Committee rebuffed an intense lobbying effort by the airline industry and voted unanimously to enhance the department's ability to police competition.

Suggested by United

The panel confirmed the department's decision to impose a predatory-pricing policy proposed earlier this year and gave the agency new powers to review the competitive impact of marketing alliances, such as the one planned by United Airlines and Atlanta-based Delta Air Lines, before they go into effect.

While Chicago's shared-use gates initiative could help smaller carriers gain a foothold and bring more competition to O'Hare, it also has benefits for the airport's dominant incumbents, Elk Grove Township-based United and its Dallas-based rival, American Airlines.

Shared-use gates, which are common at many airports around the world, would spread the cost and allow PFCs -- which are restricted to common-use infrastructure -- to be used to develop new gates.

In fact, the idea was first presented to the city by United, which wants to develop more gates that it will need only a few times a day, says Chuck Henschel, United's regional manager of airport affairs.

And O'Hare's second-largest carrier is not opposed to the idea, at least in principle.

"We're having a look at the Chicago plan," says a spokesman for AMR Corp., American's parent. "At other airports where shared-use gates are the norm, we don't have any problem with them, provided that all carriers are treated in the same way."

Since the early 1960s, O'Hare's gates have been built by the city and leased to individual airlines under complex use agreements under which the airlines fully reimburse the city's costs.

"We like (shared use) because it better utilizes gate space," says Mr. Henschel, noting that joint use also has allowed gates to be built with PFC revenues at airports in Detroit and St. Louis. "We think it's a win-win for everybody."

However, critics of O'Hare charge that PFC revenues should be directed toward increasing airport capacity in the region, instead of enhancing existing facilities.

The city's plan for shared-use gates is getting off the ground as part of a recently announced $2.3-billion, 20-year capital improvement plan for O'Hare -- financed largely with PFCs, the $3 tax paid by each departing passenger.

That long list of projects includes a $120-million expansion and upgrade of Terminal 2's Concourses E and F, which would create five new gates controlled by the city and shared by a number of airlines.

"Our vision is that the city would like to move all of our gates to shared use," says a Department of Aviation spokesman.